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tax case study |
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Our tax case study is based on the fictional couple, Joe and Mary Landowner. In order to compute their tax savings on our handy chart, we had to make some assumptions about the couple's financial situation. Your tax consequences will vary with your situation, so always consult your financial professionals. Underlying assumptions for Joe & Mary Landowner
In other words, Joe and Mary own 100 acres with a fair market value of $300,000. As of early 2006, the couple’s $90,000 annual income places them in the federal and state tax brackets noted above. During the couple’s ownership, the property’s value has increased substantially. We are assuming their basis is $100,000, meaning they could owe federal and state capital gains taxes on the remaining $200,000 when sold. The federal capital gains tax is currently fixed at 15%, regardless of income. Iowa’s capital gains tax is linked to the individual’s income tax rate. [Note: Iowa’s capital gains tax is waived if the seller has owned the land for at least 10 years and used it for farming. This case study assumes that Joe and Mary do not meet these conditions.] See the comparison chart and additional narrative. For more information Related links on the Iowa income tax credit for contributions of conservation land, effective for the 2009 tax year:
More information on tax issues: This factsheet is provided for information only. Always consult your attorney or tax advisor for legal or professional advice for your situation. reprinted from Landowner’s Options, © 2007, Iowa Natural Heritage Foundation, updated October 2008 |
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